ISM: Non-Manufacturing Contracts for First Time Since 2009

The ISM Non-Manufacturing Index contracted in April for the first time since December 2009, ending a 122-month period of growth. The index registered 41.8 percent in April, 10.7 percentage points below the March reading.

Two of the eighteen non-manufacturing industries reported growth. Many respondents are “concerned about the continuing coronavirus impacts on the supply chain, operational capacity, human resources and finances, as well as the uncertain timelines for the resumption of business and a return to normality.”

The Business Activity Index registered 26.0 percent in April, a 22 percentage point decline from the March reading of 48.0 percent. This represents the second consecutive month of contraction and the lowest Business Activity Index reading since the ISM report’s inception in 1997.

Non-manufacturing employment contracted for the second month in a row and registered 30.0 percent, a decrease of 17 percentage points from the March reading of 47.0 percent. No industries reported increased employment.

The New Orders Index registered 32.9 percent, a decrease of 20 percentage points from the March reading of 52.9 percent. This is the first contraction in New Orders after 128 consecutive months of expansion. Comments from respondents include: “No new orders booked. Activity level is pretty high, [and we’re]trying to figure how to do business remotely” and “Core business activities at a virtual standstill.”

Supplier deliveries slowed yet again, as the index registered 78.3 percent, which is 16.2 percentage points higher than the 62.1 percent reported in February. A reading above 50 percent indicates slower deliveries. This is the highest reading since the 1997 inception of the Non-Manufacturing ISM report. All eighteen industries reported slower deliveries in April.

Read the ISM release